Game-Changer: Chevron Workers at Crucial Australian LNG Facilities Approve Resumption of Strikes

Union members have decided to resume industrial action at Chevron's liquefied natural gas facilities in Australia, potentially causing renewed strikes that could impact approximately 7% of the global LNG supply. This choice follows the acceptance of new employment agreements by Chevron and the Offshore Alliance, which represents two Australian labor unions, as proposed by Australia's workplace relations tribunal, effectively resolving a lengthy dispute.

"Chevron has broken their promise made just two weeks ago to the Fair Work Commission to include the recommended changes from the commission in the Enterprise Agreements that apply to employees at the Gorgon and Wheatstone Downstream facilities," stated Brad Gandy, a representative for the union group. The Offshore Alliance mentioned in their statement that they had been collaborating with Chevron (CVX) recently to complete these agreements.

However, lawyers representing Chevron have been attempting to retract certain previously settled clauses as part of the ongoing process. Chevron has not yet responded to the request for comment.

According to the Offshore Alliance on September 22nd, the offers presented by the Fair Work Commission include significant enhancements in employment terms and conditions such as higher pay, job stability, fixed schedules, and opportunities for career advancement. In response, Chevron stated that it had agreed to the suggestion in order to address all unresolved matters.

Employees at the Gorgon and Wheatstone facilities of the company initiated a strike in early September due to dissatisfaction with their wages and employment terms. These sites hold significant global significance, as a cessation of production for a month would result in a loss of approximately 7% of the world's LNG supply, as indicated by Daniel Toleman, a senior analyst in gas and LNG at the energy consultancy firm, Wood Mackenzie.

The threat of strikes in Australia has led to a series of price increases in natural gas in Europe since August. Dutch natural gas futures, the European benchmark, rose by 1.3% on Friday to €36.7 ($38.6) per megawatt hour. Although they have slightly recovered from earlier gains, they remain down by a third compared to the high reached in late August.

"It is premature to anticipate a significant impact on the gas market," stated Alex Froley, an LNG analyst at commodities research firm ICIS, in reference to the vote to resume industrial action. He informed CNN that the action could still be called off, highlighting that previous strikes had not completely halted production at the two sites.

Following Russia's invasion of Ukraine last year, which was previously the largest supplier of natural gas to Europe, the continent made efforts to secure new sources. This included increasing imports of pipeline gas from Norway and LNG, mainly from the United States and Qatar. Europe's successful mitigation of the gap created by Moscow has resulted in a decline in prices from a record high of approximately €300 ($317) per megawatt hour reached in August 2022.

In a report released on Thursday, Moodys observed that European prices continued to surpass their long-term average. The credit rating agency expressed concern about the long-term risk posed by persistently high and unpredictable gas prices. According to Moodys, this situation will undermine Europe's competitiveness and particularly impact energy-intensive industries such as chemicals.